Nepal | December 13, 2019

PM dragged into Ncell CGT issue

PAC summons Prime Minister Dahal at its next meeting

Sujan Dhungana

Kathmandu, March 16

Prime Minister Pushpa Kamal Dahal has been dragged into the ongoing dispute related to the capital gains tax (CGT) in the TeliaSonera-Axiata deal of Ncell after Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara revealed that Office of the Prime Minister and Council of Ministers (OPMCM) had taken the proposal in the Cabinet to make TeliaSonera liable to pay the applicable taxes.

Attending the Public Accounts Committee (PAC) meeting today, Mahara said that it was PM Dahal who took the proposal of recovering CGT from TeliaSonera in the Cabinet last week and not the Ministry of Finance (MoF). However, Mahara informed that the proposal to this effect was only discussed in the Cabinet meeting last week and has not received a go-ahead.

“MoF believes that Nepal should receive the applicable tax in the TeliaSonera-Axiata deal of Ncell and we are in the process of finding out the actual amount of CGT that we should get. However, the Cabinet has only held discussion on the proposal from OPMCM to recover CGT from TeliaSonera and has not made any decision in this regard,” Mahara informed.

Following Mahara’s statement, the PAC meeting today decided to summon executive head of the country Dahal at the next meeting of PAC.

“As it has been revealed that it was the prime minister who had taken the proposal to the Cabinet to recover CGT from Swedish telecommunication company, which has already exited Nepal, PAC wants to know the reasons behind such proposal from OPMCM,” Dor Prasad Upadhyay, chairman of the committee said. “So, we will soon call for the next PAC meeting based on the time that is suitable for the prime minister.”

PM Dahal is the third prime minister of the country to be summoned by PAC. Earlier former prime ministers Madhav Kumar Nepal and Girija Prasad Koirala had been asked to be present at the PAC meeting related to other contentious issues while they held the top post of their respective governments.

In today’s meeting, Mahara said that the government is committed to collect applicable CGT in the record TeliaSonera-Axiata deal of Ncell, which amounts to $1.03 billion. “We will finalise the CGT issue related with Ncell within the next one month,” Mahara added.

Earlier, PAC had directed MoF to sort out CGT issue related to Ncell and collect applicable taxes from Ncell within three months. The three-month deadline given by PAC to MoF ends on April 15.

Meanwhile, lawmakers criticised the government for taking the CGT case of Ncell to the Cabinet. “It is the sole responsibility of revenue officers to decide who is responsible to pay CGT in the TeliaSonera-Axiata deal of Ncell. Thus, it is surprising that the Cabinet is interfering in this issue and is trying to make TeliaSonera responsible for CGT though it is unlikely that Nepal would be able to collect such a huge amount of tax from a company which has already left the country,” Bikash Lamsal, a lawmaker, said.

Another lawmaker Hari Prasad Nepal said that it is beyond the jurisdiction of the Cabinet to decide on the issue. “Cabinet interference is required only on things that are not addressed by the existing laws of the country. However, in this case, it is clearly stated by the law that Nepal should get 25 per cent of the profit made in the TeliaSonera-Axiata deal of Ncell as CGT,” Nepal said.

Likewise, lawmaker Ramhari Khatiwada said that a big corruption game is underway in the Ncell CGT issue which needs to be brought to light. “At a time when the controversy related to CGT issue of Ncell has not been cleared, trying to resolve the case through Cabinet is definitely suspicious,” Khatiwada opined.

In the meantime, Chudamani Sharma, director general of Inland Revenue Department, said that a team of experts has been formed to find out the actual amount of CGT to be collected and recommend legal and international practices of collecting CGT from such deals to the government.

The Swedish company TeliaSonera had divested its share at Ncell to Malaysian telecommunication company Axiata in April last year.


A version of this article appears in print on March 17, 2017 of The Himalayan Times.


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